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International Credit Flows and Pecuniary Externalities

Brunnermeier, Markus; Sannikov, Yuliy - CESifo - 2015

This paper develops a dynamic two-country neoclassical stochastic growth model with incomplete markets. Short-term credit flows can be excessive and reverse suddenly. The equilibrium outcome is constrained inefficient due to pecuniary externalities. First, an undercapitalized country borrows too...

Persistent link: https://www.econbiz.de/10011124895

The Greek Debt Crisis: Likely Causes, Mechanics and Outcomes

Arghyrou, Michael G.; Tsoukalas, John D. - CESifo - 2010

fiscal guarantees, respectively occurring in November 2009 and February/March 2010. We argue that the risk of contagion to …

Persistent link: https://www.econbiz.de/10008799726

Unemployment and Debt Dynamics in a Highly Indebted Small Open Economy

Heer, Burkhard; Schubert, Stefan Franz - CESifo - 2011

The paper analyzes the dynamic effects of a total factor productivity shock and an interest rate risk premium shock in …’s production side and on welfare, but not on its stock of foreign debt and the country specific risk premium, and large part of the … adjustment happens in the short run. In contrast, a pure increase in the country specific risk premium causes substantial …

Persistent link: https://www.econbiz.de/10009150631

Sovereign Defaults: The Price of Haircuts

Cruces, Juan J.; Trebesch, Christoph - CESifo - 2011

A main puzzle in the sovereign debt literature is that defaults have only minor effects on subsequent borrowing costs and access to credit. This paper comes to a different conclusion. We construct the first complete database of investor losses (“haircuts”) in all restructurings with foreign...

Persistent link: https://www.econbiz.de/10009325807

Are European sovereign bonds fairly priced? The role of modeling uncertainty

Haan, Leo de; Hessel, Jeroen; End, Jan Willem van den - de Nederlandsche Bank - 2013

This paper examines the extent to which large swings of sovereign yields in euro area countries during the sovereign debt crisis can be attributed to fundamentals. We focus on the inherent uncertainty in bond yield models, which is often overlooked in the literature. We show that the outcomes...

Persistent link: https://www.econbiz.de/10010705925

Financial Globalization and Monetary Policy

Wagner, Helmut; Berger, Wolfram - de Nederlandsche Bank - 2003

Recently, it has often been argued that globalization eases the job of central banks as it helps to tame inflation. This is used to argue that central banks (particularly the ECB, referring to the objectives as laid down in the EU-Treaty) could or should reduce their efforts in the fight against...

Persistent link: https://www.econbiz.de/10005106786

International Diversification During the Financial Crisis: A Blessing for Equity Investors?

Vermeulen, Robert - de Nederlandsche Bank - 2011

This paper empirically investigates international equity investors' foreign portfolios before and during the financial crisis by estimating a gravity model for 22 source and 42 destination countries. The results show that international stock market diversification provides large gains during the...

Persistent link: https://www.econbiz.de/10009385893

Net Foreign Asset (Com)position: Does Financial Development Matter?

Vermeulen, Robert; Haan, Jakob de - de Nederlandsche Bank - 2012

We investigate the relationship between a country's domestic financial development and the (composition of its) net …

Persistent link: https://www.econbiz.de/10009652211

The Impact of Fiscal Rules on Public Finances: Theory and Empirical Evidence for the Euro Area

Marneffe, Wim; Aarle, Bas Van; Wielen, Wouter Van Der; … - CESifo - 2010

This paper presents a review of the most significant fiscal rules policymakers can choose from. The insights from this review are then applied to the current budgetary situation of the European Union. In the European Union, the supranational Stability and Growth Pact (SGP) should provide the...

Persistent link: https://www.econbiz.de/10008833927

Transatlantic Monetary and Fiscal Policy Interaction

Aarle, Bas van; Garretsen, Harry; Huart, Florence - CESifo - 2003

This paper studies the design, effects and interactions of monetary and fiscal policies in the euro-area and between the euro-area and the non euro-area. To do so, a stylized three-country model of monetary and fiscal policy rules is constructed. It is analyzed how monetary and fiscal rules...

Persistent link: https://www.econbiz.de/10005765866

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